Economic uncertainty is something all businesses have to learn to live with and prepare for. Downturns put pressure on the budgets of businesses and households alike, forcing them to make difficult decisions about where to save money. It’s tempting, in the circumstances, to look for what appear to be easy cutbacks.
Marketing budgets are often the first to be cut. At first glance, this appears intuitive; if customers are spending less, you trim your marketing spend accordingly. But this view misunderstands what marketing is really about. Far from being an optional extra, marketing sustains brand visibility and helps keep sales moving – even when you’re facing economic headwinds.
Businesses that cut back on marketing during a downturn, then, might save money in the short term while weakening their position in the medium term. Companies that continue to communicate are the ones that clients and customers are more likely to remember when confidence returns.
The hidden costs of cutting back
When times are challenging, it can be difficult to argue against the idea of trimming marketing spend. After all, if demand in general is going through a lull, why spend money trying to stimulate it? But the reality is that pausing campaigns reduces your own visibility and presence at a time when customers – facing their own difficult decisions – are weighing their own priorities carefully.
This might not always have immediate consequences, but they can be significant. Your visibility fades into the background while competitors maintain their own position. Your sales pipeline begins to look that much weaker, while your customers perceive silence as a sign of weakness; this damages their confidence in your business and can cause people to look elsewhere.
Any money you save on reducing your marketing budget, therefore, may soon be offset by a longer-term erosion of customer loyalty and hence your market share. Once this loyalty is lost, it can be very difficult to rebuild.
A lesson from history: Kellogg’s vs. Post
A commonly cited example from the Great Depression tells us a lot about the wisdom, or otherwise, of reducing marketing spend amid economic weakness: that of Kellogg’s and Post. In the early 1930s, Post – an American cereals manufacturer – was the dominant force in the US cereals market. When economic crisis struck, Post scaled back its advertising expenditure and hunkered down.
Kellogg’s, by contrast, took the opposite approach. It redoubled its marketing efforts, launching Rice Krispies and supporting the new product with the now world-famous “Snap, crackle, pop!” campaign. By staying in the public eye, Kellogg’s captured consumers’ imagination at a time when its competitor had gone quiet. By the end of the decade, Kellogg’s had overtaken Post – and today it remains the dominant brand in the global cereals market.
This story has been told so many times in advertising circles because it encapsulates a simple reality. Difficult economic conditions don’t destroy demand entirely, but they do alter the landscape. In such circumstances, those businesses that continue to communicate – and to communicate consistently and clearly – can gain a competitive edge that could long outlast the downturn itself.
The benefits of remaining visible
Remaining visible in uncertain times has a number of potential benefits in both the short and long term. Brands that continue to communicate maintain awareness so that they remain front of mind when customers are ready to spend. Consistent communication also signals stability and reliability, both crucial qualities when clients and consumers are unsettled.
There’s also the issue of market share, as alluded to earlier. When firms start to reduce their marketing activity, the marketplace becomes less crowded. There are opportunities for businesses willing to stay active to cut through more effectively and bolster their position relative to their rivals. This can reap benefits when conditions are more favourable, as customers gravitate towards those companies that stayed more active and consistent.
Not every business has the luxury of maintaining budgets at the same level during challenging times, of course. The key is to think strategically. Focus on the channels and activities that deliver the clearest return. Invest in content with long-term value, like thought leadership pieces. Thoughtful communication goes a long way, as loyalty established in hard times often survives into better ones.
Positioning for recovery
Downturns are temporary, but credibility gained – or lost – during them persists. When the economy begins to recover, businesses that have kept their marketing consistent find themselves well positioned to recover quickly, benefiting from the visibility, trust and brand equity built up during the leaner period.
The decisions made during times of uncertainty therefore carry disproportionate weight. Marketing shapes the trajectory of your recovery as well as enabling you to survive immediate economic turbulence. Continuing to invest in it can position your business for stronger growth when better conditions eventually return.
History shows us that the brands that maintain visibility during downturns can emerge all the stronger for it. Investing in your voice during challenging periods sends a signal of confidence and stability. When the upturn comes, in time, it could be your business that leads the way forward.
At Workshop Marketing, we have a long, proven track record of delivering real results for our clients. To discuss how you can make your marketing budget go further and get real results, get in touch with us today.
